Cadbury Nigeria reverses PAT loss position in Q3

*Returns to profitability

Shareholders of Cadbury Nigeria Plc, have started looking up to robust performance by the company for the 2017 financial year, having recorded return to profitability in its Q3 2017 results, buoyed by tax holiday.

The Nigerian top ranked beverages firm’s unaudited third quarter (Q3) result for the period ended 30th September, 2017, released by the Nigerian Stock Exchange (NSE) recently, showed robust growth potentials in challenged operating environment.

Cadbury shares have gained +3.5 per cent ytd, but have underperformed the NSE’s ASI by -32.4 per cent.

According to the result which has generated positive market reaction, Cadbury Nigeria Q3 2017 results revealed that sales grew by 9.3 per cent year on year to N8.1billion y/y. with zero tax expense, Q3 PBT and PAT peaked at N702million, which was against pre-tax and post-tax losses of N1.1bn and –N989million recorded in Q3 2016 respectively.

In addition to the sales growth, the company recorded a gross margin expansion of 2,428bps y/y to 30 per cent and a -98 per cent y/y decline in net finance costs.
These positives more than offset an 18% y/y rise in operating expenses, leading to the pre-tax profit vs the loss recorded in the corresponding quarter of last year.
Sequentially, sales were flattish q/q. Gross margin expanded by 1,267bps q/q and operating expenses declined by -17 per cent q/q.

These positives led to the profits recorded versus the pretax loss of –N862m and –N859million post tax loss recorded in Q2 2017, respectively.

However, on a 9M basis, sales grew by 14% y/y to N24.4bn. 9M pre-tax and post-tax losses narrowed by -92% y/y to –N64bn. Although net finance charges grew to –N206m, over net finance income of N185m in 9M 2016, this was not strong enough to offset the strong sales growth and a 206bp y/y gross margin expansion to 23 per cent, and led to the stronger bottom line. The company reported zero tax expense.

Stories by Bonny Amadi